Ares, Black Creek to Form $29B Giant

Raj Dhanda, CEO, Black Creek Group

In a deal that will create a $29 billion investment manager, the real estate arm of Ares Management Corp. will acquire Black Creek Group, the firms announced on Thursday.

READ ALSO: Black Creek Adds 1 MSF to Atlanta Portfolio

Black Creek, a diversified Denver-based investment management firm, will add $11.6 billion worth of assets under management to Ares’ $17.2 billion platform. Black Creek’s core and core-plus portfolio will complement Ares’ strategy of value-add, debt and opportunistic platform, company officials stated.

The combined firm will be led by Bill Benjamin, partner & head of Ares Real Estate Group. Members of Black Creek’s leadership team will stay on at the new combined firm. Financial terms were not disclosed for the transaction, which is expected to close by the third quarter.

Bill Benjamin, Partner and Head of Ares Real Estate Group. Image courtesy of Ares Real Estate Group

A particular attraction for Ares was Black Creek Group’s industrial footprint. Last year, Black Creek’s vehicles raised $1 billion, nearly triple the firm’s 2018 total. That constituted the second-largest retail fundraising platform for non-traded REITs as of Dec. 31, according to a ranking from the Stanger Market Report cited in the parties’ summary of their proposed deal. All told, Black Creek’s vehicles had $5.1 billion in assets under management as of March 31. Upon the deal’s closing, Black Creek’s non-traded REITS would comprise 63 percent of the combined company’s assets.

Black Creek’s industrial holdings comprise 84 percent of the firm’s assets under management. As of March 31, its industrial operating portfolio totaled 43.7 million square feet and was nearly 96 percent leased. Retail, office and industrial assets account for the remaining 16 percent.

Led by CEO Raj Dhandra, Black Creek has mounted a robust program of industrial investment and development in 2021. During the first quarter, the firm leased 4.4 million square feet, including transactions in Atlanta and Pennsylvania’s Lehigh Valley that each exceeded 400,000 square feet.

On the development side, the firm announced plans for two major projects in the Inland Empire. The larger of the two is a 1 million-square-foot industrial facility on the site of a decommissioned power plant in Rancho Cucamonga, Calif. Also in the pipeline is a 683,000-square-foot logistics center in the Inland Empire East submarket. And in Dallas, Black Creek is teaming up with Archway Properties on a 2 million-square-foot campus.

David Roth, Partner and Head of U.S. Real Estate Private Equity, Ares Real Estate Group Image courtesy of Ares Real Estate Group

Black Creek’s platform will provide new opportunities for retail distribution of Ares’ alternative asset products, company officials say. More than 80 broker dealers at Black Creek distribute and market to 70-plus relationships with access to some 100,000 financial advisors. Retail investors make up 45 percent of Black Creek’s investor pool, followed by public pension funds (28 percent) and asset managers (19 percent). Ares’ investor base of some 1,100 investors globally will boost Black Creek’s institutional fundraising (as well as growth potential for Black Creek’s vehicles).

Since its founding in 1993, Black Creek has acquired or developed properties valued at some $23 billion; it has acquired or operated more than 1,600 properties over that stretch.